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In Ireland – deep public sector cuts are working . . .

There’s been a lot of policy chatter over the last year in the UK about the lessons the Britain can learn from Canada and Sweden- at least a decade or more ago – on cutting government expenditure harder and faster than anyone really wants. That’s all fine, but why not look across the Irish Sea and watch it happen in real time?

Of the PIIGs, the markets have far more confidence in Ireland’s ability to recover at a sustainably higher rate, because they chose the roughest medicine early on and swallowed it whole. The PIIGs (Portugal, Ireland, Italy, Greece and Spain) are becoming the PIGs without Ireland.

No one is talking about an Irish default any more. Go figure.

So three cheers for Ireland for showing Britain not only what can be done with ultra-competitive low taxes to attract investment and generate exceptional growth in the good times. And more cheers for demonstrating how to deal with a severe financial crisis like we have now – tackling it head-on.

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on Sunday, February 14th, 2010 at 9:04 pm and is filed under Uncategorized.
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It is also true that the PIIGS coutries could afford to have tighter regulation of their financial sector, since so few world players were based in their markets. But Ireland did show the way, thinking long and hard about public spending when there was no possiblility of a bailout from Germany.

This is a lesson that needs to be learned in Portugal, Italy, Greece and Spain if their economies are ever to be taken seriously.

But the doomsday scenario is surely for things to go on as they are, bailouts to occur, and for the ECB to appoint financial comissioners to oversee the economies of the PIGS, a bit like Egypt in the old days.